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Tuesday, 9 June 2009

Guess where all that stimulunacy went?

Remember all those arguments about Obama’s “stimulus” package recently, and we had all those learned economists arguing about how much stimulus was needed, and just what the multiplier would be – was it 1.256, was it 1.500.

Remember how all the truckloads of borrowed/printed/taxed money was going into so called “shovel-ready” projects that were just waiting for the shovel loads of dosh to get cracking?

As it turns out, most of that money is going where government always puts most of its money -- into fat paychecks for social service bureaucrats.

I’ll leave it as a exercise for you to work out what the multiplier will be for that. [Hint: you will need to subtract both the “opportunity cost” of taking the money out of the balance sheets of productive taxpayers, and the economic drag of new bureaucrats on economic activity.]

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